No disclosure, governance lapses at Tata firms: Sebi
MUMBAI: The Securities and Exchange Board of India (Sebi) has closed its investigation of listing disclosure and governance violations at Tata group companies alleged by former chairman Cyrus Mistry, two people with direct knowledge of the matter said. Sebi concluded that the alleged violations were not compliance lapses but commercial decisions taken by the companies, the people said on condition of anonymity.
“On the basis of replies and documents provided by the companies, it appears that the allegations primarily question the commercial decisions and the replies of the companies on the same are acceptable,” one of the two persons said.
An email sent to Sebi requesting comment on Thursday was not answered.
After Mistry was ousted as chairman of Tata Sons Ltd on October 24, he wrote to the board of the group holding company alleging governance lapses, mismanagement, insider trading and Sebi rule violations at some listed group companies.
Following the allegations, Sebi started a three-pronged probe pertaining to the alleged compliance violations, insider trading and independent directors.
In December, Sebi asked the listed companies -- namely Tata Power Ltd, Tata Motors Ltd, Tata Steel Ltd and Indian Hotels Companyb Ltd — via stock exchanges — to reply to the allegations of compliance violations before their audit committees.
“The audit committees in April submitted their reports to Sebi, stating that there is no violation or non-compliance with various provisions of Sebi Act,” said the second person cited above.
“The audit committees of the respective companies have concluded that all applicable corporate governance norms were followed. The respective companies in their annual reports have carried appropriate disclosures that the allegations made by Mr Mistry were incorrect,” said a spokesperson for Tata Sons in an emailed response.
The allegation against Tata Motors pertained to the Nano small car project. Mistry said the company was required to sell the car at ₹1 lakh, below the cost of production. The product consistently lost money, peaking at ₹1,000 crore, he claimed.
“It is correct that the audit committee met in end March 2017 to review amongst others the correspondence exchanged by the company with Sebi and the stock exchanges with respect to Mr Cyrus Mistry’s complaints which alleged corporate governance lapses,” a spokesperson for Tata Motors said in an emailed response.
“The committee generally concluded that it agreed with the management’s responses and had submitted its report to Sebi. The Company would like to categorically deny the references and would like to state that it has robust systems in place to ensure compliance to all regulatory requirements. The Company’s Board exercises its independence, both in letter and in spirit and have always acted and continue to act in the best interests of the Company.”
Allegations against Tata Power pertained to aggressive bidding for the Mundra project, which led to losses of ₹1,500 crore in 2013-14. Mistry said Indian Hotels had sold international properties at a loss and raised the issue of impairments at Tata Steel’s European steel business. The Tata group acquired the business through the purchase of Corus Group Plc in 2007.
Emails sent to Tata Power, Tata Steel and Indian Hotels on Tuesday — followed up by reminders on Thursday — were not answered.